Health Insurance Costs Jump 13% for Long Island Businesses

Long Island small businesses are facing their steepest health insurance cost increases in years, with small-group plans rising 13% on average for 2026. Some employers are experiencing premium spikes of up to 50%, creating immediate budget pressures that rival their monthly rent payments.

The timing couldn't be worse. Enhanced premium tax credits under the Affordable Care Act expired at the end of 2025, removing a financial cushion that helped many small business owners and their employees manage costs. For Long Island's Main Street economy—where small businesses comprise around 90% of all companies—these increases threaten both profitability and the ability to attract talent.

What's Driving These Premium Increases

Several factors are converging to create this perfect storm of rising costs. Medical inflation continues to outpace general inflation, while the expiration of enhanced federal subsidies means employees who previously qualified for premium assistance are now paying full freight. This creates pressure on employers to either absorb higher costs or shift more burden to employees—neither option helps with retention or recruitment.

The situation is particularly challenging for businesses with 10-50 employees, who lack the negotiating power of larger employers but face the same regulatory requirements. Nearly half of adults under 65 in individual market coverage are connected with small businesses, either as employees at companies with fewer than 25 workers or as self-employed entrepreneurs.

Budget Impact for Long Island Employers

A 13% increase translates to real money fast. An employer currently paying $8,000 per employee annually for health coverage now faces costs of approximately $9,040—an additional $1,040 per employee. For a 25-employee company, that's an extra $26,000 in annual premium costs that wasn't budgeted.

The 50% increases some employers are experiencing are even more dramatic. That same $8,000 per employee becomes $12,000—a $4,000 increase per employee, or $100,000 additional for a 25-person workforce. These numbers force immediate decisions about benefit plan design, contribution strategies, and cost-sharing arrangements.

Strategic Response Options

Smart employers aren't just accepting these increases—they're using them as an opportunity to review their entire benefits strategy. This might mean moving to a different carrier, adjusting plan designs to balance coverage with affordability, or exploring alternative funding arrangements that provide more cost predictability.

The key is understanding that you have options beyond simply writing a bigger check. Different insurance carriers are pricing risk differently this year, meaning your current carrier's 30% increase might be another carrier's 8% increase for comparable coverage.

Long-Term Business Viability Concerns

The Nassau Council of Chambers of Commerce has raised concerns that these premium increases could reduce entrepreneurship by discouraging people from starting their own businesses. When health insurance premiums rival rent costs, the financial risk of entrepreneurship becomes less attractive.

Existing small business owners may find themselves reconsidering their commitment to self-employment, potentially seeking the stability of employer-sponsored plans at larger companies rather than continuing to build their own enterprises.

Making Smart Decisions Under Pressure

With these cost pressures hitting now, the worst mistake is making hasty decisions without professional analysis. Some employers are being pitched on alternatives like individual coverage health reimbursement arrangements or health stipends, but these options often shift risk and administrative burden without delivering promised savings.

The most successful Long Island employers are those working with experienced benefits advisors who can model different scenarios, negotiate with multiple carriers, and structure plans that balance cost control with employee satisfaction. Local expertise matters when navigating New York's complex insurance market and understanding how different approaches affect your specific industry and workforce.

Your next renewal might be months away, but planning for these cost pressures should start now. The employers who weather this storm best will be those who treat benefits as a strategic business decision, not just an annual expense to manage.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.

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